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CRAFT BREWERIES STRIVE TO STAND OUT FROM CROWD: IMAGES RETOOLED AS SALES SAG IN PACKED SEGMENT

Players in the tiny but influential craft beer market are drafting plans that call for new images, new promotions and new market focuses for 1998.

The reason: The overcrowded segment is suffering slumping sales.

"The differentiation game has begun in earnest," said Jerome Chicvara, marketing director for Full Sail Brewing Co.

There are about 1,250 small brewers in the country, up 14% from 1996, according to the Institute for Beer Studies. But category sales are expected to increase from 5% to 9% this year, compared to 26% in 1996 and a 50% rise in both 1995 and 1994, according to the institute.

NO HUGE BUDGETS

Craft brewers are challenged because they lack the huge marketing budgets of the major brewers; category leader Boston Beer spent a meager $6.1 million on advertising in 1996, according to Competitive Media Reporting.

No. 2 Pete's Brewing Co. is looking to give itself an image makeover next year, according to new CEO Scott Barnum.

Past ads trumpeted the Pete's brands as party beers without stumping for their quality, Mr. Barnum said. While still weighing what media to use, the brewer plans to break ads in the first quarter that position Pete's as a fun, high-quality craft brew. Black Rocket, San Francisco, is the agency.

The brewer, which suffered an $8.9 million operating loss through the third quarter, halted consumer advertising earlier this year to stem bleeding and re-evaluate its approach after spending $731,700 during the first two quarters, according to CMR.

Pete's plans to escalate use of public relations; introduce a golden ale; increase marketing efforts behind core brands; and eliminate weaker beers from its portfolio.

'BIG BEERS'

To set the Full Sail Brewing line apart from other West Coast craft brews, Mr. Chicvara plans to hammer home the message that his company's products are full-bodied "big beers."

To do that, he plans to spend $100,000 on print advertising -- peanuts for the major brewers but a fourfold increase for Full Sail. KVO Advertising, Portland, Ore., handles.

Pyramid Ales soon will break its first concerted consumer ad effort, after years of focusing on trade publications.

The brewer is breaking a $250,000 campaign in the San Francisco area and, depending on its success, may carry the campaign into other key West Coast markets.

"We're reacting to the fact that the market is so overcrowded that [trade] marketing strategies are canceling each other out," said CEO George Hancock.

While Pyramid is spreading its wings, Frederick Brewing Co. is pulling back and trying to use money more wisely after launching its first consumer campaign this year.

During 1998, the Maryland-based brewer plans to focus its ad efforts on its brands' core markets: the District of Columbia, Maryland, southern Pennsylvania and northern Virginia. It earlier ran a far-flung campaign that reached into weaker markets, such as Atlanta.

"We're taking advertising to markets where we have the distribution to warrant" it, said Frederick CEO Marjorie A. McGinnis.

The brewery will budget about $500,000 on marketing, but right now is looking